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Local Assets Drop After CBRT Raise End-2025 Inflation Estimate

TURKEY
EM BulletStoryEmerging Market News
  • CBRT Governor Fatih Karahan presented the central bank’s latest inflation forecasts. The Governor said annual price rises are expected to be 24% by the end of 2025, up from its November forecast of 21%, while the end-2026 projection was left unchanged at 12%. One of the leading factors was the increase in the weight of the services group in the CPI basket, Karahan said, which mechanically pushed up their previous forecast up by 0.8ppts.
  • Regarding the above-expectations +42% Y/Y headline inflation figure for January, the central bank said that the print is “temporary” and “specific” to the first quarter. Karahan’s remarks on monetary policy largely repeated previously offered guidance (“We will decisively maintain our tight monetary policy stance”, “meeting-by-meeting basis” etc.), but in the Q&A section the Governor said the CBRT would assess pausing rate cuts if needed.
  • Turkish equities have slumped during the presentation, with the Borsa Istanbul Bank Index down as much as 2%. Meanwhile, USDTRY is around 0.3% firmer at typing, just shy of both the 36.00 handle and the February highs.
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  • CBRT Governor Fatih Karahan presented the central bank’s latest inflation forecasts. The Governor said annual price rises are expected to be 24% by the end of 2025, up from its November forecast of 21%, while the end-2026 projection was left unchanged at 12%. One of the leading factors was the increase in the weight of the services group in the CPI basket, Karahan said, which mechanically pushed up their previous forecast up by 0.8ppts.
  • Regarding the above-expectations +42% Y/Y headline inflation figure for January, the central bank said that the print is “temporary” and “specific” to the first quarter. Karahan’s remarks on monetary policy largely repeated previously offered guidance (“We will decisively maintain our tight monetary policy stance”, “meeting-by-meeting basis” etc.), but in the Q&A section the Governor said the CBRT would assess pausing rate cuts if needed.
  • Turkish equities have slumped during the presentation, with the Borsa Istanbul Bank Index down as much as 2%. Meanwhile, USDTRY is around 0.3% firmer at typing, just shy of both the 36.00 handle and the February highs.